Chinese Uranium Moon Shots! (by Sean Brodrick) 2/7/2007 8:00:00 AM
On April 17, the Chinese are blasting off an unmanned lunar orbiter.
Next year, they will send astronauts up to orbit the Earth …
Two years later (2010), they’ll aim to put a rover on the moon …
And by 2020 — 13 years from now — China plans to bring back lunar samples.
For now, the Chinese are just talking about sending up astronauts. But eventually, they may send up mining crews. They might even try to catapult moon rocks into the East China Sea, where they can recover and process them on the cheap.
All this may sound like something from a science fiction movie, but China’s space race is another sign that the natural resources bull market is just getting started. I’ll tell you how to find potential profits right here on Earth in just a minute. First …
Why China Is Making a Long March to the Moon: Nuclear Power
China’s actual date for putting people on the moon isn’t set yet, but it’s definitely doable according to experts like Jim Benson, president of private space-exploration company SpaceDev. As he told Newsweek magazine,
“Their timetable is absolutely realistic … some of it actually seems a little conservative.”
Now, China isn’t going to the moon just to make moon-dust angels and play golf. They’re after the stable isotope helium-3 (3He), a potential fuel for nuclear fusion.
Helium-3 is constantly spit out by the sun. It bounces off the Earth’s magnetic field, but the moon — which has no magnetic field — soaks it up. This is why the moon’s crust is saturated with helium-3.
Used in a fusion reactor — which China says it tested successfully last year — helium-3 will produce a clean, potentially limitless source of power. And at least in theory, just 40 tons of helium-3 could keep on all the lights in the U.S. for a year.
Nuclear fusion may be the long-term solution for our energy needs, and it galls me that the Chinese might do it before we do. Think about China’s timetable — if we’d built on the success of Apollo 11’s 1969 landing, it’s conceivable that we might be energy independent right now!
Instead, the world is decades away from nuclear fusion. The next important piece of the puzzle is finding out why …
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China Knows It Can’t Wait for Moon Shots
Obviously, China is taking the long view on nuclear power. They think they’re going to need nuclear fusion, even though uranium, which is used for nuclear fission power, is as abundant on Earth as zinc.
You have uranium in your body right now — it’s that common. So, why focus on the moon when there’s plenty of material at their feet?
* China is on track to build two new nuclear reactors every year for the next 14 years. * By 2010, its annual uranium demand will triple — from 3 million pounds currently to more than 10 million pounds. * By 2020, China plans to import 5.5 million pounds of Australian uranium per year as it builds 24 to 30 new atomic power plants. * At the same time, China’s total uranium demand will soar to 16.5 million pounds per year!
Even with its incredibly ambitious nuclear power program, China also builds a new coal-fired power plant every week! So you see, China has no choice but to keep accelerating its investment in nuclear power. It’s either that or choke to death on coal smoke.
Plus, You Have to Factor in The Rest of the World!
Just to meet current projections of power needs, the world needs to build about 900 new nuclear power plants by 2050. And if we’re taking global warming seriously, we’re going to have to stop building coal-fired plants altogether.
Your average coal plant spews 3.7 million tons of carbon dioxide (a greenhouse gas) into the air every year, along with hundreds of tons of heavy-metal laden ash. An operating nuclear power plant produces zero greenhouse gases.
So we’re probably going to have to build a lot more than 900 nuclear power plants. And that means the demand for uranium is just going to be huge!
About 30 new nuclear plants have been proposed in the U.S. And I think there are going to be a lot more, both here and abroad …
Japan, which is only the size of California, is building 11 new nuke plants … India wants to build up to 20 new plants … and Russia is shooting for at least 42. Even in Australia, which currently has no nuclear power, the Prime Minister is pushing a plan to build 25 nuclear power plants.
By the way, don’t count on other alternative energy sources. None of them are quite ready yet.
For example, wind power is great — but most wind power is generated when it is least needed. And don’t even get me started on that farm-belt boondoggle, corn-based ethanol, or its northern cousin, throw-money-down-a-hole oil sands!
Conventional nuclear power, using brand-spankin’-new, cheaper-and-safer third-generation nuclear technology, is the only viable alternative energy we have right now in quantities big enough to make a difference.
Who’s going to supply all the uranium needed for these nuclear power plants? Here’s where we get to the part about making money over the next decade …
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Select Uranium Suppliers Are The Path to Potential Profits
The uranium mining industry is as underdeveloped as the oil industry was in 1900. Mine supply fell 40% short of demand last year, and this gap probably won’t be closed anytime soon.
In other words, future supply will come at much higher prices. I think uranium should hit $100 per pound this year, up from $75 currently. And it should go much higher after that.
Will that hurt demand for uranium from utilities? Not much, because the cost of uranium makes up such a small portion of the cost of electricity from a nuke power plant. (The cost of coal or natural gas, in contrast, makes up a far larger share of the cost of producing electricity.)
If the price of natural gas doubles, the cost of electricity from a gas-powered plant would increase by about 40%. But if the price of uranium doubles, electricity from a nuclear power plant would go up about 5%.
So, the price of uranium could double — or triple — and utilities would still line up to buy it. That makes China’s plan to go to the moon for helium-3 look perfectly sensible.
In the next twenty or thirty years, however, the world will need a lot of additional uranium supplies, which will come from fledgling miners.
Some are close to actually producing uranium; others have a longer road ahead of them. But many of them have the potential to be the titans of tomorrow. And they are trading for pennies on the dollar!
Of course, if you’re going to invest in uranium, don’t just throw money at the first company you see. Some uranium explorers are nothing more than real estate companies — they just don’t have enough skilled geologists and engineers to bring their properties from raw resource to mining project.
If you want a pretty safe bet in uranium, you can always invest in the Uranium Participation Corp., a Canadian fund that tracks uranium by buying and holding uranium oxide and uranium hexafluoride. The fund is managed by Canadian miner Denison Mines. The symbol is U on the Toronto Stock Exchange. In the U.S., the symbol is URPTF on the Pink Sheets (URPTF.PK on Yahoo).
But for my money, I want the 10-for-1 leverage that comes from owning a small-cap uranium miner.
That’s why, tomorrow afternoon, I’m sending out a special alert to subscribers to scoop up one special uranium miner with a whopping $10 in uranium reserves for each dollar it costs to buy its shares!
Plus, I’m also going to include three mining small-caps that are loaded with undervalued reserves in gold, diamonds and silver.
If you want a detailed preview of tomorrow’s recommendations, check the report I just posted on my Website. But do so right now. Because the deadline for joining me is tonight.
I know I may seem obsessed by natural resources sometimes, but I’m not alone — China is willing to go to the moon to find the next great commodity! One man’s obsession is another’s moon shot!
